Philippines could grow beyond 8% in 2015 and beyond

The Philippines could begin growing by more than 8 percent in 2015 and sustain that even onto the next administration given the correct policies and strong fundamentals driving investor confidence now, an investment bank said.

"There is no reason why the Philippines could not start growing faster than China," Marios Maratheftis, global head of macro research at Standard Chartered Bank said in a briefing on Thursday.

"The country is moving into the right direction. There is no reason why the Philippines will not grow by 8 percent plus by 2015," he added.

The statement compares with Standard Chartered's official forecast of 7 percent growth by 2015. For this year and the next, the economy is expected to expand by 6.9 percent and 6.3 percent, respectively.

The Aquino administration has set the following medium-term growth targets: 6-7 percent this year, 6.5-percent to 7.5-percent next year, 7-8 percent by 2015 and 7.5-8.5 percent by 2016.

Maratheftis said the "positive story" of the Philippines has reverberated across the world given that "right plans," especially on infrastructure, are in place. The bank also credited the public-private partnership (PPP) initiative.

In a report dated July 1 but released on Thursday, Standard Chartered said low interest rates and a flush of liquidity will help finance PPP projects, of which only three have been successfully awarded since its launch in November 2010.

The awarding of investment grade status could also boost foreign direct investments (FDI) — tagged as the missing link to the country's success story. Maratheftis noted that "strong confidence" in the Philippines from corporations globally.

"FDI will eventually catch up. There is a lot of room for Philippines to catch up," Maratheftis said.

"If you have the three drivers of growth: correct policies, strong fundamentals and confidence, it will be difficult to isolate one over the other," he pointed out.

A recovery in the United States would also work on the country's favor, the official said, noting that the Philippines is "most sensitive" to developments in the world's largest economy. Among others, trade and FDI gains are expected once the US fully recovers.

Steve Brice, the bank's chief investment strategist, said it would be important for the government "not to become complacent" despite all its laurels.

Growth, he said, will need to be sustained by ensuring public projects are bid out accordingly and in time.

Brice also said there is a need to create more channels for investments to keep the Philippines on the radar screen. On the local bourse for instance, he said "a lot of money chasing limited assets" have caused valuations to ratchet up relative to our neighbors.

"Valuations are really high. It's a challenge for the market. But we always believe on the structural re-rating story," Brice told reporters.

"You would expect earnings to grow up faster here than in the US against this backdrop (of strong growth)," he added.

On the property market, Brice said the market is seen to remain "relatively buoyant," with slight correction on prices in the future owing to huge supply coming in. "But we don't expect it to slump back dramatically."

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